Just received the my monthly commodity report, thought I would share:
Beef - Beef production last week declined 3.2% and was 7.9% less than the same week a year ago as beef packers slowed output due to poor margins. Cattle slaughter last week was the smallest for any non-holiday week since March. Despite this, beef prices were generally soft with holiday demand subsiding. The December 1 cattle on feed inventory was
1.4% larger than 2013 while cattle placements into feedlots during November were down 4% from the prior year. The slaughter ready cattle supply appears to be backing up which could temper the anticipated beef production declines vs. the previous year this winter. Still, beef prices should remain historically expensive.
Analysis – Same story, different day. Beef prices remain at historically high levels with no relief likely until the end of ’15 at the earliest.
Pork - Pork output last week rose 2% but was 1.2% less than the same week a year ago. Last week's hog slaughter was the biggest for any week in a year. Pork production typically seasonally peaks during the late fall but the cyclical decline in output this winter is projected to be one of the smallest in the last 30 years. This should mitigate any pending pork price increases during the next few months. Still, the downside price risk in pork bellies from here is almost certainly nominal. Ham prices could find a bottom soon also.
Analysis – Bacon pricing continues to be a value offering with little likelihood of increase anytime soon. Reports are indicating that hog supplies have recovered following the devastating effects of PEDv in ’13 and ’14. This is a good sign for pricing and supplies in ’15. What will exports do in ’15? Right now the European economy is in turmoil suggesting that exports to that market will not increase anytime soon further supporting moderate pricing in the US.